Gahagan’s sentence will be capped at nine months as part of a plea bargain, said Penobscot County Deputy District Attorney Michael Roberts.

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Piscataquis County District Attorney R. Christopher Almy recused himself from the case because he said he has known Gahagan for years and is a member of the Kiwanis club.

Roberts said Gahagan has repaid the $45,000 but still may have to pay $6,000 in restitution.

Roberts said Gahagan had been taking money from the Kiwanis club for years but had always paid it back. That changed in 2007.

Gahagan stole the $45,000 from mid-2007 until the spring of this year, said Roberts. The prosecutor said much of the money was used for family purposes, but Gahagan spent $16,000 of it at what is now Hollywood Casino in Bangor.

“There were many debit card transactions not related to club purposes that were in the vicinity of $45,000,” said Roberts. “He got into a situation where he couldn’t repay it.”

The district attorney’s office recommended the nine-month sentence in order to keep Gahagan in county jail, instead of state prison.

“White collar crimes are hard because it’s a breach of trust to the organization,” Roberts said outside the courtroom. “Somebody like Mr. Gahagan, who is remorseful, really doesn’t belong in the Department of Corrections custody. Nine months is the longest sentence the court can give him to keep him in a county jail, away from the hardened criminals.”

Roberts said Gahagan has been cooperative with the district attorney’s office. He added that the reason for the delay in court proceedings was to verify the amount of money that was taken.

Gahagan resigned as Milo’s town manager on April 6, a day after resigning as the Kiwanis club treasurer, a position he held for 20 years.

Roberts said Kiwanis club president Jan Barton received a resignation letter from Gahagan in April that acknowledged the missing funds. That letter has not been made public.